The court in Manchester annulled the order against Nicola Haworth after finding that HMRC had failed in its duties to Haworth, as a disabled person, under the Disability Discrimination Act (DDA).
This was the first time a court had considered a public authority’s duties under the DDA in the area of insolvency.
In wider implications for the profession, the court left open the question of whether a trustee in bankruptcy is also a public authority, who owes duties to the bankrupt under the DDA, and whether his or her costs and expenses could be reduced if such duties are breached.
The background to the case (Nicola Haworth v Donna Cartmel) was that Haworth had sustained physical injuries in an accident during her 20s.
She also suffered from anxiety and depression, and had a phobia of opening mail, particularly official letters.
Haworth had bred Arabian horses as a therapeutic hobby, from which she derived no income.
But in 2005 an anonymous letter to HMRC claimed that Haworth was receiving more than £100,000 a year from her horse breeding “commercial enterprise.”
Tax officers then wrote to Haworth to request tax returns. When no returns were received, HMRC assessed that she owed more than £192,000 in tax. Haworth’s benefits were stopped and the petition from HMRC was later made against her.
Haworth’s mother told HMRC of her daughters’ disability in 2007. But when HMRC served Haworth with a statutory demand on May 2 2008, her mental condition prevented her from opening the envelope. She also lacked the capacity to deal with the bankruptcy proceedings instigated by the petition, but Haworth was made bankrupt on August 29 2008.
The court found that HMRC failed to make reasonable adjustments as required under the DDA. Officers could have made contact with Haworth’s mother and waited for provision of a medical report before taking action.
The court also found that HMRC should also have considered alternative enforcement methods.